Commerzbank conference call. Q results

Transcription

1 Commerzbank conference call Q results Dr. Eric Strutz Chief Financial Officer Frankfurt November 9, 2004

2 Chart 1 Commerzbank: pillars of our distribution platform Commerzbank PCAM CIB Private Clients Asset Management Mittelstandsbank International Corporate Banking Corporates & Markets Retail Banking Private Banking comdirect Asset Management Real Estate Fund Management Mittelstand Germany Central/Eastern Europe Leasing Europe West USA, Asia, Africa Financial Institutions multinational and large corporates Securities

3 Chart 2 Business lines at a glance 2004 Operating profit (m ) RoE (%) Q3 9m Q3 9m Retail Banking Asset Management Corporate Customers & Institutions Securities Group Treasury Mortgage Banks Others and Consolidation n.m. n.m. Commerzbank Group, total

4 Chart 3 Q 3: revaluation reserve increased again, Tier I capital ratio above target Revaluation reserve in m Tier I capital ratio (in %)* pre-revaluation 650 1,240 1,253 1,035 1,213 target post-revaluation ,100 03/03 06/03 09/03 12/03 03/04 06/04 09/04 equities bonds 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun Sep * incl. market risk position

5 Chart 4 Interest income seasonally lower than in Q2, but significantly above previous year in m % % 718 Slight quarter-on-quarter decline in average interest margin from 2.76% in Q2 to 2.72% in Q3.* hardly any dividend income from participations portfolio 36m from Eurohypo not recognized in Q 3 ( 88m in 9months) Q3 Q4 Q1 Q2 Q * based on average risk-weighted assets for balance-sheet business according to BIS

6 Chart 5 Quality of loan portfolio continually improving Loan-loss provisions in m 927 1,321 1, * expected worst case * Loan-loss cover ratio comfortable in m Loan-loss provisions Country LLP and general provision Collateral Non-performing loans In excess: 634m 7,077 7,711 In excess: 7,840 1,180m 109.0% 117.7% 5,506 6,660 5, ,857 1, Loan-loss provisions in m Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04

7 Chart 6 Seasonal dip in commission income as well (in m) % Except for securities business, all other commission income on positive course % 526 Retail banking down by 28m in Q 3 from Q 2 level Goal: Commission income should register pick-up in Q 4 Q3 Q4 Q1 Q2 Q

8 Chart 7 Trading profit more than disappointing (in m) Q3 Q4 Q1 Q2 Q Trading traditionally weak in Q 3: however, completely disappointing this year. Positive activities weighed down by: Convertible bonds Global propriertary trading Equity sales & trading Goal: Exiting or dramatically reducing unprofitable geographical and product areas - 97m

9 Chart 8 Further decline in operating expenses in m 1,113 1,104 1,078 +/- 0% 33,327 32,377 32,349 1,128 32, % 1,078 33,206 Despite 550 staff of former SchmidtBank and consolidation of additional entities at BRE (360 FTEs), operating expenses stable at year-ago level. Goal: Cost target of 4.5bn expected to be achieved Q3 Q4 Q1 Q2 Q * Operating expenses Staff * from Q 2 incl. SchmidtBank

10 Chart 9 Pre-tax profit negative due to restructuring expenses (in m) Operating profit Regular amortization of goodwill Restructuring expenses* Expenses arising from special factors Pre-tax profit Taxes on income Profit attributable to minority interests Consolidated loss/profit Earnings per share Q m * of which: 73m personnel measures 59m other operating expenses

11 Chart 10 Statement of comprehensive income for Commerzbank (in m) After-tax profit, before restructuring expenses Change in revaluation reserve Change in currency translation reserve Change in cash flow hedge reserve Increase in unrealized reserves for items shown at cost Comprehensive income Restructuring expenses Comprehensive income after restructuring expenses Q m

12 Chart 11 Medium-term return targets confirmed RoE (after-tax) targets of Commerzbank > 8% > 10% (current cost of capital) (long-term cost of capital)

13 Chart 12 Commerzbank: pillars of our distribution platform Commerzbank PCAM CIB Private Clients Asset Management Mittelstandsbank International Corporate Banking Corporates & Markets Retail Banking Private Banking comdirect Asset Management Real Estate Fund Management Mittelstand Germany Central/Eastern Europe Leasing Europe West USA, Asia, Africa Financial Institutions multinational and large corporates Securities Dr. Achim Kassow Klaus M. Patig Martin Blessing Klaus M. Patig Nicholas Teller

14 Chart 13 Starting point for Commerzbank s investment banking 3 problem zones Regional positioning too broad Stable, customer-based business: Productivity gaps between locations 97% of income in first nine months High earnings volatility due to non-customer proprietary trading (dedicated proprietary-trading books)

15 Chart 14 Commerzbank s new approach to investmentbanking activities We intend to expand in the following main products and services: Fixed income and other debt-related products Foreign exchange trading Equity-related derivatives Corporate finance and capital restructuring Equity research, sales and trading for German clients M&A advisory work for German corporate clients We are completely exiting or drastically reducing: Our dedicated proprietary trading operations The Tokyo office and a large part of the New York office Our pan-european equity trading operations Most of our non-german equity research Non-German M&A advisory Other, small non-core businesses

16 Chart 15 Restructuring measures 1. Integration into Corporates & Markets 2. Adjusting business model Exit dedicated prop. book Exit Japanese activities USA: focus on core competences only Efficiency improvement London Reduction of FTEs: front-office, back-office, total front-office back-office total FTE structure in front office, by location FTE as of reduction (approx.) FTE 09/04 Income 09/04 FTE post restruct. Frankfurt London CCMC % 9% 8% 6% 4% 12% 45% 34% 38% ComSec Other % 51% 50% 1, Frankfurt London New York/Tokio Other

17 Chart 16 Post-restructuring result: m postrestructuring Income Revenue split Costs Operating profit Equity tied up 1, VaR % points RoE after revenue split -11% 12% 23% CIR after revenue split* 117% 86% -31% Annualized difference: 228m RoE target: 18% pre-tax with greatly reduced volatility +6% +4% 18% +19% 12% -11% RoE actual Improvement in results Equity freed-up RoE after restructuring Efficiency capital allocation Target (excl. growth) * incl. provisioning

18 Chart 17 Corporates & Markets strategic measures Goal: New organization: Expansion of customer-based, profitable core business of investment bank Concentration on capital-market needs of - Mittelstand - multinationals - private customers - institutions Stable, risk-reduced return Combination of capital-market products and core target corporate customers in a single division Growth areas: Derivative products for all asset classes Structured products Risk-management products

19 For more information, please contact: Commerzbank Investor Relations Tel. +49 (69) ir@commerzbank.com

20 Chart 19 Chart 18 /investor relations/ This presentation has been prepared and issued by Commerzbank AG. This publication is intended for professional and institutional customers. / Any information in this presentation is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Commerzbank Group with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgement at this date and time, and are subject to change without notice. This presentation is for information purposes, it is not intended to be and should not be construed as an offer or solicitation to acquire, or dispose of any of the securities or issues mentioned in this presentation. / Commerzbank AG and/or its subsidiaries and/or affiliates (herein described as Commerzbank Group) may use the information in this presentation prior to its publication to its customers. Commerzbank Group or its employees may also own or build positions or trade in any such securities, issues, and derivatives thereon and may also sell them whenever considered appropriate. Commerzbank Group may also provide banking or other advisory services to interested parties. / Commerzbank Group accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this presentation. / Copies of this document are available upon request or can be downloaded from